Here's an interesting thought for you on used car pricing - follow me, because this is a bit lengthy.
Once the supply chain problems hit and car prices went up, all the dealers howled.
We can't buy cars for this price and we have to sell them at a higher price, so you need to loan more!
The banks said screw it, everyone's getting free money, so we'll go 120% LTV on loans. Then people started asking for forebearance, pushing these car notes out a year. Now that year is up, cars are losing value, AND people can't pay the notes. Worse, all these dealers that bought overpriced inventory are sitting on it, because they can't get what they want out of them. So, over the next six months you're going to see a little miniature auto loan crisis unfold. Just like the 2008 housing loan crisis, but with cars this time.
There's plenty of used cars now, and soon, there will be TONS more. More than really can be sold at this price level. Factor in interest going up, and people simply can't pay for these cars.
So now, you truly do have a depreciating asset, backed by dog**** loans that are the result of greedy people playing games with other people's money. Now they can't do 120% LTV, because they can't sell those loans as quality financial instruments to other banks or hedge funds so that they can continue originating loans. This means banks will go back to 80% LTV, meaning you need a bigger down payment or a cheaper car.
So, credit will get harder to get, people cannot pay these overinflated prices, and stick interest rate hikes on top - that by the way is affecting the dealer's floorplan. All the cars they bought at inflated prices are now losing value, AND their interest rates are rising on the cars sitting on their lots. It's one-two punch.
Wanna stay in business? Sink or swim, baby! Prices are going to have to come down, because people are tapped out.
